Financial Secrets for thirty somethings
Part 1. The questions about money we all share
A while back (January 2018) a young lady, Niamh, posted a question about financial planning on LinkedIn, and it went viral!
Yes, incredibly, within just a few days her post attracted many thousands of likes and over 1,000 comments!
Which is really odd when you think about it because most people would say that personal finance is a ‘dull’ subject, right?
Well, you must decide that for yourself, after you’ve read Niamh’s question (which she agreed to let me copy here) and my answers, in this and two further Insights.
First here’s a question for you
If this subject (financial planning) is not the last thing you want to deal with, in your life, then what is?
Seriously, do let me know in the comments below because I’d love to hear your thoughts, and here’s why.
You see, almost without exception, everyone I meet tells me that they love the fact that I:
‘help people understand their money
and make better decisions about it’
People are fascinated when I ‘sketch out’ a diagram like this one, to show how they could make sense of their long-term money challenges.
Connecting your money to what matters in your life
Virtually everyone I meet (including all of my many suppliers over the years) says to me:
‘OMG, I really need that!’
In fact, the only exception to this was Noel Ford, my cartoonist, who said,
“OMG, I really could have done with that – 30 years ago”
Well, Noel is in his 70s now!
However, despite everyone knowing that they need help in this area, only a tiny minority ever follow up and take it.
Of course, I could put this down to my personality and occasionally direct (scary?) way of communicating, but the evidence is that most people ‘get stuck’ and avoid this subject – and there are a great many reasons for this, not least the fear of exposing our situation to others.
If money is an area of your life that you avoid or on which you always get ‘stuck’, please do not read the Insight on this page just yet, as it’s probably not what you need right now.
Instead, read this Insight about the three magic words that could help you get unstuck on any of your big challenges in life.
The three magic words Insight covers a whole lot more than just money issues – and whilst it’s quite a chunky article, I think you’ll get a lot out of it.
You might also like to read this short insight on what really motivates us all… and why, typically, your financial planning will not!
Then if those insights ‘chime’ with you, come back here to get ‘stuck in’ to this financial planning game.
It really can be fun.
OK, here’s Niamh’s question in her own words
I wonder if I am alone in thinking this…
I’m a thirty *mumbles something* year old woman who considers herself to be financially illiterate.
My parents are very lovely, kind people, who loved me a lot but they weren’t the best with money & they never taught me how to handle my finances.
At school in Home Ec, I was taught how to sew a hem, the importance of washing my hands after handling raw chicken & how to sauté an onion but I was never taught the importance of having control over your personal finances and investments.
At Uni, I did business studies & there wasn’t one module that covered personal finances, investing, planning for your future or even general information around mortgages, taxes & pensions which are part and parcel of everyday life.
As a result, I just kept putting it to the back of my mind hoping that it would all figure itself out.
But now I find myself at an age where I don’t know anything about pensions, investments, mortgages or credit scores & I’m not too sure where to start. It feels a bit intimidating.
Does anyone know if there’s some sort of unbiased personal finance class for adults?
Also, this is definitely something we should be teaching our kids in school. I’m pretty happy I’ve never had salmonella but I’d be even happier to have a house!
What a great question!
And thanks to Stephen Brice (a Bristol-based Financial Adviser) for recommending my work in the comments on LinkedIn. As a LinkedIn ‘newbie’ I’m sure I’d have missed this one otherwise.
Anyway, it was obviously music to my ears eyes to see Niamh’s question on whether anyone knew of an unbiased personal finance class for adults?
So, when I saw it, I just sate here, staring at the screen thinking,
‘Yes, Yes, Yes … the very people I want to help,
understand the importance of financial education now’
Now, don’t worry, this is not some ‘cheesy’ sales pitch for my services.
I want to focus on what we can all learn from Niamh’s post, and from the enormous stream of comments that appeared beneath it.
Most people have the same need as Niamh
Most people in the world, in their 20s, 30s and 40s (and perhaps even some in their 50s and 60s), have the same need and the same question as Niamh; they just keep quiet about it.
Perhaps they keep quiet simply because they’re too embarrassed to ask, and that might be because they, wrongly, assume that everyone else has got this stuff figured out.
Very few have, by the way. And we know this much from some scary research.
Here’s the financial education challenge
A 2015 UK survey (by Ipsos Mori) asked the following questions:
1. What’s the average cost of raising a child in Britain from birth until they reach the age of 21?
2. What pension fund would you need to provide a retirement income (including your state pension) of c.£25,000 a year?
Now, before you look below, have a guess at the answers – just for fun 🙂
It should only take you a minute.
Now here are the answers
What’s the cost of raising a child?
Over 60% of people thought the cost of this would be less than £100,000.
More than 25% thought it would cost less than £30,000!
The actual estimated cost?
Around £230,000, including some University support but excluding private school fees, according to LV insurance.
And here’s the shocker pension question
Over 50% of people believe that a target pension of £25,000 could be delivered with a fund of less than £150,000.
30% thought that a fund of £50,000 would be enough, while 12% (more than 1 in 10 people) thought that a fund of £15,000 would do the job!
For goodness sake… £15,000 is less than the targeted annual income in the question!
What fund would you actually need?
Well, about £300,000, or more if you wanted an inflation-linked income in retirement.
Now that might sound scary, but here’s the interesting thing… if you start saving early enough, it really doesn’t need to cost the earth to build those sorts of funds
Conclusion so far
To plan your money well, you need a solid approach to reveal the realistic cost to fund your financial life goals, and that’s just part of what you can learn here.
In part 2 of this mini-series (for thirty and forty-somethings), we’ll look at the best places for guidance on financial life planning. And, I can tell you now, you won’t find the answers in an APP! 😉
So, for that, and for all my ideas, to make more of your money (and earn more of it too), sign up to my newsletter below.
I look forward to welcoming you back again soon
Thanks for dropping in
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